Saturday, September 20, 2008

U.S. Household Net Worth Up By 43% Since 2002

According to the Federal Reserve, U.S. household net worth fell by $2 trillion over the last year, from $58 trillion in the second quarter of 2007 to about $56 trillion in the second quarter of 2008 (see chart above). But compared to 2002, U.S. household net worth has increased by almost $17 trillion (from $39.2 trillion to $56 trillion), or by almost 43% in the last six years.

As Ryan Ellis at American Shareholders Association reminds us, let's "keep it in perspective."

15 Comments:

At 9/20/2008 5:00 PM, Blogger Walt G. said...

Just for the sake of argument, let's spin some figures another way:

According to the U.S. Treasury website, the national debt went from $6.2 trillion to $9.7 trillion in the same six-year time period, which is a change of approximately 56.4%. In the same time frame, according to the U.S. Bureau of Economic Analysis, the GDP increased from $10.5 trillion to $14.5 trillion, which is a change of approximately 36%. We don’t want to miss those perspectives, either. Look around and ask yourselves: Are we better off than 6 years ago? Somebody, someday, will have to attempt to pay all that money back. Who do you suppose that will be?

 
At 9/20/2008 6:05 PM, Blogger Dave Narby said...

Hey, they just socialized the mortgage and financial industries!

Socialism must be good, look how our household worth has grown!

Seriously, Mark - I love your blog, but capitalism has been thrown out the window. They are clearly socializing profits for the rich at the expense of the poor and middle class.

These reckless companies need to be allowed to fail, and they ought to prosecute the CEO's and upper management for fraud and malfeasance, and seize their assets.

I'm sure there's many more like this one

Exposing Fannie Mae and Freddie Mac: Corruption

http://www.youtube.com/watch?v=q5ho_OAJIU8

At least we can take some comfort that by the time they get done inflating the currency to cover this debt, they'll have lost money too, haaaa!

 
At 9/20/2008 6:13 PM, Anonymous Anonymous said...

Walt, when you say:

Somebody, someday, will have to attempt to pay all that money back.

What are you talking about - that won't happen!

 
At 9/20/2008 6:32 PM, Anonymous qt said...

Walt,

Right again.

How does one pay...no pension for the "rich". Won't it be interesting when you discover how rich you really are?

 
At 9/20/2008 7:35 PM, Blogger bob wright said...

Dave Narby,

I agree that losses are being socialized.

But the poor and middle class are not paying for it.

86% of federal income taxes are paid by the top 25% of earners. The top 50% paid 96%.

So while taxpayers are paying the bill, I don't think it's the poor who is picking up the tab.

 
At 9/20/2008 7:52 PM, Anonymous Anonymous said...

Look at it from year-on-year changes.

 
At 9/21/2008 1:05 AM, Blogger bobble said...

i don't think anyone would disagree with the fact that some households got very rich over the last 8 years. the question is, was it a few people making many billions, or was it the general populous?

i don't that chart give us the answer

 
At 9/21/2008 8:50 AM, Anonymous Anonymous said...

From business cycle peak to peak, real per capita household net worth has declined.

Nominal household net worth increased from $43 trillion in Q2.00 to $56 trillion in Q2.08, a 29% increase.

The CPI increased 29% and the population increased 8% over the same time interval.

A pitiful showing, without analyzing the distribution of the net worth increase by income or net worth quintile (bobble's point).

 
At 9/21/2008 10:39 AM, Blogger Walt G. said...

anonymous 6:13:

Actually, it is already happening. The payments on the interest alone on the national debt are the third highest outlay in the budget behind health and defense. We're spending nearly $1/2 trillion- per-year to service that debt. That's money that can't be spent elsewhere. And it dries up the credit market while artificially raising interest rates.

 
At 9/21/2008 5:34 PM, Anonymous Anonymous said...

The current blip on the radar is nothing that a little inflation can't handle.

We'll just inflate away your life savings. Problem Solved.

Now what to do about that menacing derivatives bubble?

 
At 9/21/2008 6:39 PM, Anonymous QT said...

Anon,

The printing press doesn't fix the prob. Taxes on the other hand..now there's something a politician can warm to. I expect this chart will make a convincing case that taxes are far too low.

With all the recent expenses of the Treasury (
the wording on the most recent agreement actually puts their actions beyond the control/oversight of congress or the judiciary), any circumspect, eloquent liberal would consider a tax increase a prudent course of action.

It will, of course, be a tax on the rich...and most of us will discover how much richer we are than we think. We can also expect that some Americans will be contributing their pensions to the national good...no not Senator Dodd...such statemen are only generous with other people's money.

 
At 9/21/2008 6:55 PM, Blogger Walt G. said...

qt,

I'm pretty sure that enacting a law that can't be reviewed by the Supreme Court is a stretch of Executive and Legislative power. If wording such as that is legal, maybe that disclaimer should be written on every piece of legislation that is enacted :)

 
At 9/21/2008 10:23 PM, Anonymous QT said...

Walt,

It will be interesting to see whether this gets through or not. As you say, it would appear to be a stretch of the Treasury's power.

It does give one pause. These are not words that one reads every day.

 
At 9/22/2008 1:05 PM, Blogger OBloodyHell said...

> any circumspect, eloquent liberal would consider a tax increase a prudent course of action.

Why qualify that?

Has there been any time in recent history (oh, 30-40 years) when a liberal HASN'T considered a tax increase a "prudent course of action"?

Just curious.

And I'd point that the bill in question
a) Does limit the amount of money involved
b) Does expire in about 2 years, so it's not an indefinite grant of power.

Not to suggest in any way I support it, but "the sky is falling!!" tone of the rhetoric is a bit overdone.

One would think that someone's tried to put Sarah Palin in charge, or something like that.

 
At 10/03/2008 1:20 AM, Anonymous Michael Turner said...

median household net worth was stagnant for most of the bubble, despite most household net worth being composed of house prices. In 2002, going by the Case-Shiller indices, housing was already overvalued. Now it's between halfway and 2/3rds back toward historical norms -- a huge wipeout of net worth still to go.

How could someone with multiple graduate degrees (econ, finance) ignore the median in an increasingly upward-skewed income distribution, and ignore inflation entirely? Aren't concepts like "median" and "inflation" precisely the sorts of tools economists and financial analysts use to establish true perspective? Very witty blog here, but color me astonished about its naivete. I don't think I'll be returning.

 

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